State's white collar convicts get lighter sentences

White collar criminals convicted in California’s federal courts were less likely to serve prison time than their counterparts nationally the past three fiscal years.

And convicts also often received less time in a cell when judges did order incarceration, according IRS criminal enforcement data.

Across all U.S. District Courts, 69 percent of those convicted of tax fraud, money laundering, and other white collar offenses received prison sentences during that period.

Each of California's four federal court districts fell at least 5 percentage points short of that rate, the data shows. In the eastern district, based in Sacramento and Fresno, just 51 percent of white collar convicts served prison time.

That disparity could be the result of any number of things.

“It may just very well be that in this particular district either people are cheating less on their taxes,” said Patrick Hanly, a former assistant U.S. Attorney in Sacramento, “or the IRS is just not catching the big cheaters.”

The federal tax filing deadline is less than a month away, and an army of accountants is mobilizing to reduce their clients’ bills. A relatively small (but financially significant) percentage of those clients every year lie and cheat on their filings to steal from the government.

The penalty can be severe for those nabbed by IRS investigators. On average the past three fiscal years, convicts sentenced to prison for defrauding the federal government received almost three years, the data shows.

However, California federal courts handed down lighter terms than the national average, particularly the southern district in San Diego. White collar convicts there received an average of 15.3 months incarcerated.

The Transactional Records Access Clearinghouse at Syracuse University collected the IRS data and California Watch analyzed prison sentence numbers for fiscal years 2008 through 2010. (For more details on the calculations, see our explanation at the bottom.)

Here’s how California compares:

DISTRICT

PRISON TIME

AVERAGE TERM (in months)

NATIONAL AVERAGE

69.40%

34.9

CENTRAL (Los Angeles)

64.50%

32.7

EASTERN (Sacramento)

51.30%

18.4

NORTHERN (San Francisco)

63.10%

24.7

SOUTHERN (San Diego)

62.90%

15.3

The central district, predictably, handles by far the largest volume of white collar crime cases, with results that almost mirror the national averages.

Of course, regional differences in income and types of crime are going to cause some variance in the conviction numbers.

Fraud involving computers was the lead charge in seven federal prosecutions in Sacramento last fiscal year, more than any other white-collar offense, according to the IRS data. In San Francisco, that was not the lead charge in any case.

Prison terms are often tied to the size of the fraud. So, in places with higher incomes, tax cheats likely have more money to hide from the government, potentially leading to tougher penalties.

Plea bargains impact the numbers as well.

William Bridge, formerly a mortgage broker in Cambria, hid $3.8 million in income from the IRS, but received less than two years in prison in 2008 after he pleaded guilty. He also had to pay more than $1 million in fines and restitution.

Judges have discretion but largely stick to the sentencing guidelines when deciding prison terms and fines. “That’s what drives these sentences,” said Hanly, now a criminal defense lawyer.

Gone are the days when judges relied solely on their own inclinations and “some judges would give you 20 years and some would give you 10, some would give you five,” he said. “And some would give you probation.”

Data details: The calculations on percentage of convictions resulting in prison time (PRISON TIME) and length of time served (AVERAGE SERVED) are averages weighted by the number of convictions in each district.

Also, TRAC includes all convictions (including those that did not result in any prison time) when averaging sentence length by those convicted in each U.S. District Court. California Watch recalculated the average to count only convictions that resulted in a prison sentence.

Comments

We do not need to be putting non-violent people in prison. White collar criminals who are actually guilty should be made to serve the poor through community service work, plenty of that is needed. Restorative justice gives back to the community and it has been proven to work much more than revenge-based justice.